COI Insurance Rate Hikes Affect Policyholders

Those who have purchased universal life insurance policies over the past several years may have found that their premiums have gone up while their benefits have decreased due to COI insurance rates.

Two Types of Life Insurance Policies

There are typically two types of life insurance policies: universal and term.

Term life insurance, or whole life insurance, are basic life insurance policies. Term policies provide protection for accidental death and debilitating injuries over a period of time.

The policyholder pays premiums to an insurance company. Upon the policyholder’s death, the company pays the benefits to the beneficiaries of the policy.

Term policies typically have fixed premiums, and their rates are usually lower than those of universal policies.

Universal life insurance policies were created in the 1970s. These policies allow the buyer to adjust the death benefit and premium costs.

These policies are generally considered investments. The insure makes deductions including cost of insurance, or COI, and the remaining cash value goes to the policyholder.

These policies are sold at a guaranteed interest rate. The rates insurers charge for COI are dependent upon these interest rates.

An Increase in COI Insurance Rates

In the past, when interest rates have been high, insurance companies make money on the universal polices that people purchase.

However, in recent years following the financial crisis of 2008, interest rates have been consistently low. This affects the bottom line of insurance companies. If they cannot reinvest the money for higher rates, they do not make as much money off of the policies.

Recently, insurers have increased their COI deductions, and universal life policyholders across many insurers have been forced to pay higher premiums for little or no increase in death benefit.

In fact, in October 2016, Lincoln Financial Insurance as well as other universal life insurance insurers dramatically increased their COI insurance rates, increasing them by anywhere from 40 to 100 percent.

Policyholders who are dissatisfied with the increase may have trouble replacing their policy. Many of those insured are over 70-years-old which means that a new insurance policy, if even available, will be difficult to find.

Many universal life insurance policyholders whose COI insurance rates increased either have to pay a higher premium, buy a different policy, allow the policy to lapse or reduce their death benefit.

Those affected claim that the rate increase has been done unfairly. They claim that insurance companies are increasing premiums to protect their profitability and have done so at the expense of their policyholders.

The Lincoln Financial Insurance universal life policies that are affected are those purchased through Jefferson Pilot Life. These policies are Flexible Premium Adjustable Life Insurance policies known as “Legend Series” policies:

• JP Legend 300
• JP Legend 200
• JP Legend 100

If you own a universal life insurance policy with Lincoln Financial Insurance or another insurance company that was recently hit with a COI insurance rate increase, you may be entitled to compensation.

Join a Free Universal Life Insurance Class Action Lawsuit Investigation

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